Work & Pensions

Here is a selection of the arguments that Tory MPs made during yesterday's debate on limiting the increase in benefits to 1% for each of the next three years.

The Government's overall policies help those on low incomes: "The Opposition have argued that this uprating of 1% will impact on working people and not just those on benefits. Given that the previous Government made 90% of workers eligible as welfare recipients, that is inevitable. Unfortunately, Labour Members make the mistake of taking these measures in isolation. If we take the Government’s measures as a whole, including tax allowances, energy tariff changes and cutting petrol duty, low-income working households will be better off." - Aidan Burley MP

And the biggest burden of deficit reduction is being met by the better off: "I want to remind the Opposition of what they have done. They have opposed £83 billion-worth of savings this Parliament. That is equivalent to adding another £5,000 of debt for every working family in the country. We hear much about taxing the rich, yet, in this Parliament, the richest will pay more in tax than in any single year of the previous Government—more tax on capital gains, more stamp duty—they will be less able to avoid and evade tax and they will pay more when they take out their pension policies." - Iain Duncan Smith MP

Stop taxing people only to return that money via the benefit systems: "Is not the philosophical underpinning of this debate our wish to create a hand-back society, not a hand-out society? Is not cutting taxes on lower earners the best way to help those on low earnings, rather than recycling their hard-earned money through the benefits system?" - Robert Halfon MP

Fairness between those in work and those out-of-work:

"My constituents in Erewash often say to me that fairness works both ways. One gentleman said to me that he is working around the clock and his wife has two part-time cleaning jobs, and that they are trying their best to keep things going. Like me, he wants to support people in this society who, for whatever reason, will never be able to stand on their own two feet and get work, but that was not his point. His point was about the standard of living of other people in the area on full benefits. He did not think it right that they should have a higher percentage increase than his family’s budget." - Jessica Lee MP

"I was approached by a member of Manchester constabulary in my advice surgery recently. He said, “How can you justify putting out-of-work benefits up by 5.2% last year, when I have had a pay freeze and I risk my life every day?” Is that not the nub of the argument? People who are in work have to be treated fairly." - Jake Berry MP

The Coalition may get its welfare bill passed but it may do so at a cost to its relations with the House of Lords.

The Upper House repeatedly amended the welfare bill - sometimes by large majorities. Labour, crossbench and Lib Dem rebels defeated, for example, the benefits cap but there were also a significant Tory rebellion - led by the former Lord Chancellor, Lord Mackay - against reforms to the Child Support Agency.

The Coalition is attempting to prevail by asserting what is known as "financial privilege". This gives the Commons "sole rights" in respect of financial legislation that applies indivisibly to public expenditure and to the raising of revenue to meet that expenditure (PDF background here).

"It cannot be denied that we are in extremely difficult financial times, and that the government has no choice but to take measures to address the situation. Tackling the unsustainable rise in spending on benefits and tax credits, as part of the government’s overall deficit reduction strategy, is undeniably important."

The Minister of State at the Department for Work and Pensions with responsibility for Employment, Chris Grayling, was responsible for answering an Opposition day debate on unemployment yesterday afternoon.

Labour Members, both from the frontbench, and through the Shadow Minister, Liam Byrne, issued a number of attacks on the Coalition's record, some more based upon reality than others, which Mr Grayling was able to swat away with relative ease.

Mr Grayling was then able to set out the Coalition's achievements on unemployment, especially youth unemployment. First, he explained why figures from the last month showed signs of labour market stabilisation:

"It is because over the past month, employment has risen by 38,000 and unemployment has risen by 16,000, a number that is considerably exceeded by the change in activity levels. The youth unemployment figure, excluding full-time students, has remained static, and the jobseeker’s allowance claimant count has risen by 3,000, whereas the total number of people who have moved off incapacity benefit and income support as a result of our welfare reforms is 10,000. Those are one month’s figures and certainly do not reflect a long-term change, but they are at least a sign of some stabilisation in the labour market."

Tory MP Nick de Bois has disputed claims that Work and Pensions Secretary, Iain Duncan Smith, blamed the X Factor, amongst other things, for causing the summer's nationwide riots. Speaking on Sky News yesterday, Enfield MP de Bois, said that Duncan Smith was not "trying to say the X-Factor is the cause of the riots" but that the country does not "pay enough recognition ... to the routes that people take which are hard work".

De Bois said that "the point about X-Factor is effectively about celebrity cultures, where there's this idea that you can have a bit of luck, and instant fame, instant celebrity status". This idea, he said, had been perpetuated by the media, often at the expense of "the route most people succeed by, in improving their life circumstances, which is effectively hard work and being rewarded for that.”

In an interview with yesterday's Guardian, with the headline, "X Factor culture fuelled the UK riots, says Iain Duncan Smith", the Work and Pensions Secretary said:

"If you look at the footballers, you look at our celebrity culture, we seem to be saying, 'This is the way you want to be'. We seem to be a society that celebrates all the wrong people ... Kids are meant to believe that their stepping stone to massive money is The X Factor. Luck is great, but most of life is hard work. We do not celebrate people who have made success out of serious hard work."

20 Conservative MPs have written to ConservativeHome, commending the progress the Government, and in particular, Skills Minister John Hayes, has made with regards to apprenticeships. Here is their letter in full:

Firstly, the strong increase in engineering and manufacturing apprenticeships (up 20%) will be especially important as we strive to rebalance the economy towards more high-end manufacturing and greater exports. Secondly, around three quarters of the growth is amongst the over 25s with a firm weighting towards advanced level apprenticeships (A level equivalent); factors which underpin the necessary re-skilling of the workforce - identified by Lord Leitch in his landmark report for the previous Government - via the apprenticeship route. Thirdly, the significant increase in the number taking apprenticeships in business, accounting and law will be important in widening access to the professions and so vital in promoting greater social mobility.

The facts flatly contradict critics’ predictions that apprenticeship growth would be almost all at the low levels and in anything but the high tech, high skilled sectors of the economy.We believe that the Government’s striking progress in this area is of critical importance to both our economic future and for the life chances of the hundreds of thousands of people who are now seizing the opportunities apprenticeships present.

The positive shift in the perception of apprenticeships, their rapid take up and an emphasis on quality, through minimum contract values for providers and stricter rules on employment, owe much to the work of our Party through our Skills Minister, John Hayes MP who vigorously championed apprenticeships for many years in opposition and has now successfully driven this programme through to real delivery in the early life of this Parliament.

As Jonathan Isaby reported last week, Friday saw the Second Reading of Christopher Chope's Private Member's Bill, the Employment Opportunities Bill, which would allow "freely consenting adults" to opt out of the minimum wage.

Mr Chope takes an interest in employment legislation, and has sought to change the minimum wage before.

The Bill "would set a limit on compensation for awards for unfair or wrongful dismissal or discrimination arising out of employment and provides that that maximum limit should be £50,000". Mr Chope told the Commons:

"People are making or threatening to make claims when they are faced with dismissal, saying that they will not go for the ordinary unfair dismissal but will base their claim on the fact that their dismissal has been on the grounds of racial discrimination or discrimination based on sex, gender or something similar. We are getting a two-tier system in which people threaten to sue in a tribunal for the much larger, open-ended awards that are available and my Bill would place a cap of £50,000 on all that."

The Conservatives held a debate on unemployment in the House of Commons yesterday. Shadow Work and Pensions Secretary Theresa May spoke from the front bench.

"I am sure that no one in this Chamber needs reminding of the unemployment challenge that this country faces. Every day, Members of this House deal with letters and e-mails from constituents who have lost their jobs and are unable to find another. People feel helpless, frustrated, distressed and utterly let down. Who can blame them? The recession is having a devastating effect on employment around the country. No industry or geographical area remains immune from this downturn and the people of Britain are dealing with its harsh realities every day.

What has been the Government’s reaction to this crisis? Have they taken immediate action to help people now? Sadly not; unemployment has been rising constantly for more than a year, yet the Government closed an average of one jobcentre a week in 2008. As late as last July, Ministers were still issuing press releases patting themselves on the back for record levels of employment, and brushing the unemployment problem to one side. As Ministers were reminding us that we should see the rise in jobseeker’s allowance “in context”, perhaps I can provide a little context for the Government, in the hope that it will get them to face up to the problems that we face.

There are 1.97 million people unemployed. Youth unemployment is at its highest level since 1995. There are record redundancies, combined with the lowest level of vacancies since records began. Jobseeker’s allowance claims are up by 55 per cent. in one year, with the claimant count smashing through the 1 million mark, and there are over 130,000 fewer jobs in the economy since June last year. The reality is that Britain now faces an unemployment crisis.

Yet there is still no real action from the Government. Instead, true to form, they have given us only empty promises. In October, the Government announced £50 million of help for people “currently facing redundancy”. Five months on, how many have received that help? None. Why? Because the projects will not start until April. In December, the Government announced £79 million of funding. Two months later, they reannounced that help. Only then was it revealed that no new employment programmes would be in place as a result of that money until the end of this year.

Ribble Valley MP Nigel Evans asked what can be done to make parents take responsibility for their children:

"Poverty for youngsters is often reinforced when a married couple separates by a missing parent who refuses to take their responsibility. The Child Support Agency is often deficient in chasing the missing parent. What action can the right hon. Gentleman ensure that the CSA takes to make sure that it tracks down missing parents, so that they pay for their own children?

James Purnell: In the past year, the CSA—now the Child Maintenance and Enforcement Commission—has collected an extra £156 million, but we agree that more needs to be done. That is why we are taking powers in the Welfare Reform Bill to be able to take away people’s passports or driving licences without a court process. That will make things much more speedy. I hope that the hon. Gentleman will support that, unlike the Conservative party in the Lords the last time that that was proposed. That is also why we are saying that, where there is a payment, parents should be able to keep all of it and that there should be a complete disregard for child maintenance payments and benefits. We think that that could lift an extra 100,000 children out of poverty."

The new Shadow Secretary of State, Theresa May, put pressure on the Secretary of State over child poverty:

"According to a recent report by the Joseph Rowntree Foundation, 15 indicators of poverty and social exclusion had worsened in the five years preceding the onset of the current economic downturn, more than double the number in the previous five years. That includes the number of people living in very low-income households. Perhaps it is little wonder that the number of children living in poverty has risen by 100,000 in the past two years. How does the Secretary of State explain the Government’s poor performance?

James Purnell: By referring the right hon. Lady to the OECD report, which stated that we had the best record among the industrialised countries for reducing child poverty and inequality.

Mrs. May: Yet again, the Secretary of State is very complacent about his attitude to the issue. Another example of the Government’s complacency is their refusal to end the couple penalty in the tax credit system, which would lift 300,000 children out of poverty. Why will the Government not do that?

James Purnell: The right hon. Lady has no policy of that kind, because she has no way of funding it. The Conservatives used to say that they would fund it out of welfare reform, but now they are not prepared to do as much welfare reform as us. If the right hon. Lady wants to repeat that claim, she will have to find new resources. Hers is a policy without a budget, and I hope that she will not pretend to repeat it."

Theresa May, now Shadow Secretary of State for Work and Pensions, spoke today on the second reading of the Welfare Reform Bill. The Party supports the bill, although it also takes the view that it does not go far enough.

Determined to continue the work of Chris Grayling, Mrs May set out her stall as a welfare reformer:

"Mr Speaker, this Government has promised many times that it would finally reform welfare. But every time it has made that promise, it has failed, because too many hon members on the Labour backbenches have believed that to support welfare reform is, somehow, not progressive. But there is nothing progressive about just handing out cash for being out of work. Real progressives – like the Secretary of State and me – know that we need to reform welfare so that we help people to help themselves.

That’s why we Conservatives support this Bill. As it passes through Parliament, the Secretary of State will come under great pressure from many of his colleagues in the Parliamentary Labour Party to back track. In those circumstances we will support him if he stands firm. But I will be watching over his shoulder to make sure that he does stand firm. And if he doesn’t, hon Members can rest assured that he and his colleagues will be replaced by a Conservative government utterly determined to introduce real welfare reform and get Britain working."

Mrs May has also written an article for the Guardian's Comment is Free site in which she urges the Government to be more energetic:

"Yet, I must still confess to being a little disappointed by the bill. The ideas are there, but the ambition is still lacking. James Purnell's idea of supporting over 1 million people on incapacity benefit with one interview at the jobcentre is not good enough. That's it, just one single interview for people, many of whom have spent this entire Labour government at home on benefits. With lengthening queues outside jobcentres and our benefit bill rising, the challenge of welfare reform is growing; now is not the time to be faint-hearted. That is why I am determined to take reform further and deeper."

Theresa May's appointment was not universally welcomed. But she is full of zeal, and perfectly capable of handling a complex brief without losing sight of the big picture. Hard-pressed taxpayers and vulnerable people alike (and individual membership of both groups is increasingly likely) are more than ready for effective welfare reform.

"To ask Her Majesty’s Government what are the latest figures for (a) total unemployment in the United Kingdom, and (b) claimants of unemployment benefit.

The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord McKenzie of Luton): My Lords, in the quarter to November 2008, 1,923,000 people were ILO unemployed. In December 2008, 1,157,200 people were claiming jobseeker’s allowance.

Lord Roberts of Conwy: My Lords, we would all agree that those are quite alarming figures. As I understand it, they are likely to increase. What steps are the Government taking to reduce those numbers and when will we be in a position to see whether those measures are working? In parenthesis, I listened to the Prime Minister at Question Time this morning. Although he showed a proper degree of regard for the welfare of the unemployed, he had very little, if anything, to say about actual measures to reduce the numbers of unemployed.

Lord McKenzie of Luton: My Lords, I am rather surprised at the nature of that supplementary question. Of course, these figures are disappointing and, of course, the Government take them very seriously. We know there has been an intensification of the global financial crisis—the latest data, in particular from the US, demonstrate that—which impacts on economies around the world, including in the UK, but as a Government we have a choice; to do nothing, sit back, wring our hands and wait for the market to address it, or to be active. That is what we have been. I take noble Lords back through October in terms of what we have done in banking recapitalisations, support for the banking industry, the DIUS redundancy support package, the extra support for small firms, the Pre-Budget Report and the fiscal stimulus, the homeowner mortgage support scheme, changes to the credit guarantee scheme, new apprentices, the job summit announcement and more. We have active labour market policies."

"To ask Her Majesty’s Government what are the latest figures for (a) total unemployment in the United Kingdom; and (b) claimants of unemployment benefit.

The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord McKenzie of Luton): My Lords, in the quarter to October 2008, 1,864,000 people were ILO unemployed. In November 2008, 1,071,900 people were claiming jobseeker’s allowance.

Lord Roberts of Conwy: My Lords, stark and grim as these unemployment figures are—there are now more than 1 million claimants for unemployment benefit—does the Minister accept that these figures, and the figures in coming months, represent a key test of whether the Government’s policy of spending out of recession is actually working? That was something, incidentally, that the late Lord Callaghan said was impossible when he encountered recession during his premiership.

Lord McKenzie of Luton: My Lords, of course the figures are disappointing, which is why the Government announced today a packet of measures that will help people to gain the right to training and to upgrading their skills to get back into employment as quickly as possible. On the central point, it is absolutely right to seek to stimulate the economy as we have done. The choice is between those who would be active in doing this and those who would do nothing. Of course, we will not have under this comparator the ability to evaluate the effects of the noble Lord’s party’s policy, which is to do nothing. We do not believe that these figures are the worst; there will be some more to come. Therefore, it is very important that we have active labour market policies. That is why the steps that we have taken on the banking system and in supporting small businesses—through deferrals of the small companies tax rate and dealing with HMRC’s flow of tax payments to help the liquidity of small businesses—are so important. That is the right thing to do. The wrong thing to do is to do nothing and let the economy and banking system implode."

Labour must not be allowed to propogate the fantasy that the Conservatives "would do nothing" about the economic crisis. Indeed frontbenchers have recently highlighted where the Government is failing to act.

David Evennett, MP for Bexleyheath and Crayford, exposed a worrying fact - that far too many gas fitters are not properly qualified:

"Mr. David Evennett (Bexleyheath and Crayford) (Con): CORGI estimates that as many as 20,000 people are working illegally with gas in the UK. What more can the Government do to ensure that the public are aware of the dangers of employing unqualified workers?

Jonathan Shaw: I am grateful to the hon. Gentleman for that question. He is right: about 10 per cent. of installations were carried out by people who are still not registered with CORGI, and more needs to be done on that. As part of the arrangements for the new contract with Capita, that body will donate about £1.7 million to a charity. My noble Friend Lord McKenzie is asking other energy providers to put in resources, too. That fund will be used further to raise awareness. The more we do to raise awareness, the greater the reduction in the number of fatalities will be."

Philip Dunne, the Ludlow MP, uncovered latest unemployment figures:

"Mr. Philip Dunne (Ludlow) (Con): How many jobseeker’s allowance claimants there were in (a) the UK and (b) Ludlow constituency on the latest date for which figures are available. [237964]

The Secretary of State for Work and Pensions (James Purnell): The number of people in the UK claiming jobseeker’s allowance in October was 980,900. In Ludlow, the number of people claiming jobseeker’s allowance was 651.

Mr. Dunne: I am delighted that the Secretary of State is aware that unemployment in Ludlow has gone up by 10.5 per cent. in the past year alone, but why are there 300,000 fewer British people in work today than two years ago, while there are almost 1 million migrant workers in work?

James Purnell: On the first part of the hon. Gentleman’s question, we totally understand that people will be worried about the economic circumstances, and our commitment is to do everything that we can to help people get back into work if they lose their job. That is why we have announced, for example, an extra £100 million—to do exactly that. We will do that to ensure that we never reach the unemployment levels that we had in the past of almost 3,000 people, not 651, in his constituency at the height of the previous recession."

Yesterday the House of Lords debated a Pensions Bill. Lord Skelmersdale, a member of the Conservative Work and Pensions team, has indicated his disgust at Labour and Liberal Democrat tactics.

Lord Fowler (a former Secretary of State for Health and Social Security) tabled an amendment to the bill. Currently people with personal, defined contribution pensions must buy an annuity at the age of 75. (An annuity gives a pensioner an agreed level of annual income over a given period of time.)

Lord Fowler's amendment called for a suspension of that rule, in light of the state of the economy.

He explained that the wording of his amendment might have been inelegant, but that its purpose was straightforward - a suspension rather than an abolition of the annuities rule. (Lord Fowler is also in favour of abolition, however.) He added:

"The only half-argument that I have heard against such a change is that the rule affects only a small number of people. I do not regard that as an argument for inaction. Injustice is still injustice, however small the number affected."

The amendment failed, as Labour and Lib Dem peers opposed it. Lord Skelmersdale has issued the following statement:

"This was one of the most shameful Liberal votes in this Parliament. Even if you are in favour of other ideas, there was no case for voting against temporary, urgent help for these elderly people. Their spokesman Lord Oakeshott, was in a jealous huff because the amendment was not his. At a time of crisis, no responsible party would put personal pique and quotes in LibDem newssheets ahead of the interests of tens of thousands of worried families."

"Equally, the pigheaded attitude of the government in saying no to freedom of choice at the time of maximum need for older, prudent people, who have saved but see their savings vanishing before their eyes as a result of government policies, is disgraceful."

"All our amendment asked for was a temporary stay in this rule. To vote against that on a day the London market lost £30 billion demonstrates how utterly out of touch with the real world Labour and the increasingly ludicrous LibDems are."

Chris Grayling: "I find it baffling when the Secretary of State talks about his achievements. According to the Office for National Statistics, the unemployment rate among 16 to 24-year-olds was 14.1 per cent. in 1997; today it is 14.5 per cent., and nearly 50,000 more young people are unemployed. When the Secretary of State said to this House,

“Actually, youth unemployment has been all but eradicated”—[ Official Report, 18 July 2007; Vol. 463, c. 283.]

was he telling the truth?"

Peter Hain, SoS for W&P: "I repeat to the hon. Gentleman the point that I have already repeated: long-term youth unemployment—those on the claimant count for more than a year—has been virtually eradicated. That is a fact. He can check the statistics with me; I am happy to exchange correspondence with him on the issue. The truth is that we have a good record on increasing the number of jobs for young people. We continue to do so. However, there are more young people in the under-25 age group in the labour market now. That accounts for some of the points made by the hon. Gentleman, but he should check his figures."

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John Redwood on pensions: "How many complaints does the Minister know about concerning the very large sums of money taken out of funds each year under the tax policy of the previous Chancellor of the Exchequer, and the ineffectiveness of the regulator to resist those demands?"

Mike O'Brien, W&P Minister: "Of course, the regulator’s aim is to ensure that we have a stable and effective pensions scheme. By and large in recent years, since the office of the regulator has been established, it has gained credibility and increased confidence in the pensions industry. As a result of the creation of the regulator, we have a pensions industry that is much stronger than it was."